Why gas prices in Europe can reach $5000 or more

We continue to sum up the interim results of our analytical work, since recently the execution of what seemed to be the most fantastic forecasts has been very dense. January 4, 2022 on the "Reporter" came out publication under the heading "The cost of gas in Europe may reach $ 3000 per thousand cubic meters." I remember that then some of our regular readers, who, of course, know better, called the author of the lines a “miracle dreamer”. On March 7, 2022, the price for 1 cubic meters of gas in the EU set a historical record, breaking the bar of $3900. How did it happen, and what will happen next? $5000 for 1 cubic meters?

The day before, on the leading European trading floors, the price of 1 cubic meters at the moment reached the level of $3900, however, rather quickly “falling” to $2900. At the same time, prices for electricity and all other types of natural resources are growing rapidly. Europe, followed by Southeast Asia and the rest of the world, have in fact crossed the line after which the global economic the crisis. As we expected, the unfortunate Ukraine, which the United States used as a testing ground for provocations against Russia, played a key role in all this. But in reality it turned out even worse than we expected.

After the price anti-records of 2020, $1000 and even more so $2000 per thousand cubic meters of gas seemed something incredible, unacceptable, and $3000 was completely unthinkable. However, all these problems were largely man-made. Under the aggressive pressure of the "green" lobby in the West, they consistently reduced investments in exploration. Old hydrocarbon deposits in Europe are gradually being depleted. Coal and nuclear energy are actually anathematized. Renewable energy sources have not been without drawbacks: in low-wind weather, windmills generate less electricity, and in calm weather they do not work at all. Fashionable solar panels cannot do without the sun.

Greedy to buy gas at a price of $500, the Europeans were left with half-empty underground storage facilities. The Nord Stream 2 gas pipeline, alternative to the Ukrainian GTS, was constantly obstructed by Brussels itself, at the behest of Washington. Against the backdrop of an unexpectedly cold winter and a rapid recovery in industry in Europe and Southeast Asia, oil and gas consumption skyrocketed, and with it, the cost of a barrel and a cubic meter. Since the Asian market offers the best price, exporters sent LNG tankers there. Gazprom also contributed to the shortage of energy resources in the Old World by refusing to supply more "blue fuel" than stipulated in existing contracts.

And then the Ukrainian crisis broke out. In January, we suggested that 3000 cubic meters could exceed $XNUMX when the Russian monopolist itself cuts off gas supplies to Nezalezhnaya if it starts stealing gas. But it turned out much worse.

Urged on by the Americans, Ukraine poked a sleeping "Russian bear" with a stick for 8 years, finally believing in its impunity. Apparently, the last straw for the Kremlin was the information about the start of work by Kiev on nuclear weapons with the complicity of the United States. Russia, finally, woke up, harnessed and quickly drove off, so much so that everyone was stunned.

In response, the collective West and some of its accomplices in Asia imposed a record number of sanctions against our country. Perhaps if the Russian military operation had been carried out in February 2014, the reaction would not have been as harsh as 8 years later, but what's done is done. Washington and Brussels are calling for isolating Russia from the "civilized world" and completely abandoning the purchase of our oil and gas. Well, after February 24, 2022, nothing can be ruled out, but European partners should be afraid of their desires, as they may come true.

Surprisingly, despite the active hostilities in Ukraine, Russian gas is still pumped through its GTS. According to the transit contract concluded at the end of 2019, this should be at least 40 billion cubic meters per year. Nothing personal just business. But what if it gets really personal?

The fact that Russia itself can impose a ban on gas supplies through the first Nord Stream was announced yesterday by Deputy Prime Minister Alexander Novak:

We understand that in connection with the unfounded accusations against Russia regarding the energy crisis in Europe and the imposition of a ban on Nord Stream 2, we have every right to make a “mirror” decision and impose an embargo on gas transportation through the Nord Stream 1 gas pipeline. one".

Recall that the design capacity of Nord Stream is 55 billion cubic meters per year, the actual capacity is 58,8 billion cubic meters, and the peak capacity is 61,96 billion cubic meters of gas. Exactly the same volumes of gas were supposed to be pumped around Ukraine through Nord Stream 2, which now sadly lies at the bottom of the Baltic Sea. How much will 1 cubic meters of gas in Europe cost if Gazprom now shuts off the valve on the first Nord Stream? This will one-time remove 55 billion cubic meters from the European market. No LNG can replace it, while it must be understood that the EU will have to compete on price with Southeast Asia, which will not voluntarily give up the volumes it needs to anyone.

4500 dollars? 5000 dollars?

And imagine what could happen if, suffering a defeat from Russian troops, the Ukrainian Nazis simply blow up their GTS so that it “does not get to the Muscovites.” Is this possible? Yes, easily. This will mean minus another 40 billion cubic meters, which Gazprom has pledged to pump through Nezalezhnaya. And then what to do? Who will restore the pipeline in a country where there are fierce hostilities? Who will then protect it along its entire length from repeated sabotage? This is simply impossible before the normalization of the situation in the country, which requires the capitulation of Kyiv.
And how much will gas cost in the EU, which should soon start preparing for the next heating season?

6000 dollars for 1 thousand cubic meters? Much more?

What will happen to European industry then? What will ordinary people living under a liberal market say when they receive receipts? Oh, Brussels bet on the wrong horse.
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  1. Expert_Analyst_Forecaster 8 March 2022 10: 33
    The good news is that the author switched to predicting catastrophes for Europe. In this case, it is not encouraging that the author's predictions often do not come true.

    The fact that for short periods on the stock exchange prices jump to incredible values ​​does not mean at all that all gas is sold at these prices. Part of the gas goes to Europe under contracts, at high, but not catastrophic prices. The problem with the price of gas can easily be solved by "printing" a few more tens or even hundreds of billions of euros. As was done during the pandemic.
    1. Bulanov Offline Bulanov
      Bulanov (Vladimir) 8 March 2022 19: 23
      The problem with the price of gas can easily be solved by "printing" a few more tens or even hundreds of billions of euros.

      And why does Russia need euros and dollars if the West has forbidden Russia to use them?
      You need to sell gas for yuan or gold.
      1. Expert_Analyst_Forecaster 9 March 2022 03: 28
        Europe buys gas not only from Russia. The author predicts disaster based on high gas prices. And I'm talking about the fact that high prices are not a problem at all. The only problem is the lack of gas. But the article is not about that.
  2. Dust Offline Dust
    Dust (Sergei) 8 March 2022 11: 44
    Definitely need to close SP1. It turns out complete idiocy, we sell gas to the Germans at $200 per thousand cubic meters. And the Nazi Scholz supplies weapons to our enemies. Germany, a rich country, can afford to buy gas for 5000-6000 dollars. Let him buy..
  3. Oleg_5 Offline Oleg_5
    Oleg_5 (Oleg) 8 March 2022 11: 57
    High prices - this is for those who did not have time. With long term contracts.
    Those who have time - download and sell with a good fat to the rest.
    At the same time, they manage to impose sanctions.
    1. Expert_Analyst_Forecaster 8 March 2022 13: 05
      No. The volume that is prescribed in the long-term contract is supplied. They asked to increase the volume of delivery. It was denied.
    2. antibi0tikk Offline antibi0tikk
      antibi0tikk (Sergei) 8 March 2022 18: 04
      Sanctions from hell!
      The generation of the 2000s does not know how to live on.
      Generations born in the USSR neigh laughing tongue lol and post memes.
  4. Vladimir Golubenko (Vladimir Golubenko) 8 March 2022 12: 21
    Close the sale to the Germans! No talk or doubt. Again, let the Germans cash in on our gas. Stop pumping completely.
  5. Jacques sekavar Offline Jacques sekavar
    Jacques sekavar (Jacques Sekavar) 8 March 2022 13: 20
    After yesterday's speech by A. Novak, there is no limit to the rise in prices.
    Sooner or later, a replacement will be found and reimbursed for supplies from the Russian Federation, but this will take time, and during this time the economy may suffer greatly, which will inevitably cause discord within the EU and provoke social instability.
    The most important thing for today is the reaction of China to the US threat in case of non-compliance with the sanctions imposed against the Russian Federation.
    So let's see if it will take the side of the United States, which has called the PRC its enemy No. 1, support the Russian Federation or continue the policy of “both yours and ours”, given the level of relations with the Russian Federation declared by Xi Jiping to be higher than allied ones.
  6. alexey alexeyev_2 (Alexey Alekseev) 8 March 2022 18: 30
    In the morning I called and congratulated my German relatives, or rather the female part of it, on the holiday .. They live in Fulda and Kassel. I have not heard such selective obscenities and accusations of Russia in their plight for a long time. sad
    1. GIS Offline GIS
      GIS (Ildus) 9 March 2022 08: 53
      lol this is just the beginning)))
    2. Vyacheslav 64 Offline Vyacheslav 64
      Vyacheslav 64 (Vyacheslav) 10 March 2022 02: 38
      Propaganda is a great thing!
  7. zloybond Offline zloybond
    zloybond (steppenwolf) 8 March 2022 19: 06
    Against the background of record revenues from gas, Russia needs to morally finish off the West and the USA - to reduce the price of gas a little for the population. So, all of a sudden, on TV, announce a reduction in cost ... let them strangle each other out of anger there.
  8. Kurlander eight Offline Kurlander eight
    Kurlander eight (Kurlander Eight) 8 March 2022 19: 40
    The author, as often happens, gives out wishful thinking. In reality, negotiations are underway right now on a complete blockade of the supply of all Russian energy resources. Just on the Iranian and North Korean model. Alas, there is not a single country in the EU that would be very critically dependent on the supply of any Russian energy resources. The most unusual situation, for example, is in Latvia. If you look at the graphs, Latvia buys 91% of gas from the Russian Federation, well, a complete monopolist. The reality is completely different, Latvia does not care who buys gas, whose more profitable it buys. You just need to understand ALL the Baltic States, yes, ALL from Poland to Finland is one common connected gas transportation system. It was rebuilt, that is, LNG connections and terminals with EU money in 2012-2017. It is possible to pump gas from half a dozen LNG terminals or from fields in Norway. Latvia chooses an LNG terminal in Klaipeda, pumps gas from its largest underground storage facility in the Baltics in Incukalns and uses it for a couple of years. That is, the Baltic States can wait a couple of years until the price suits it then buy. What is the catch why Latvia takes gas from the Russian Federation? Yes, simply because the Russian Federation persistently REQUESTS to do this by offering the sweetest prices. Russia asks? It can't be! And here is a bummer for turbo patriots, Latvia doesn’t care who to buy gas from, only Latvia is the only country in the world from whom RUSSIA buys gas! Funny but true. The huge underground gas storage in Latvia is huge because the only possible gas storage is where an emergency gas supply is stored for the entire north-west of the Russian Federation of Leningrad and the region, Karelia and the Pskov region. This is in case of shutdown of supplies from Western Siberia, which is not uncommon purely for natural reasons. For 50 years and billions of dollars of investments, the Russian Federation itself has managed to create emergency capacities, including Gatchina, they are enough for 48 hours. Then only Incukalns in Latvia or the complete collapse of the entire gas system in the northwest. Ten million people without heat gas if the Latvians do not want to sell from their storage. And on the drum, they will buy a couple of gas tankers and they don’t need any Russia, from the word at all. Because they are always waiting for who will offer the best price. Today it is LNG through Klaipeda. Well, their fuel gas will rise in price, unpleasant of course, but not critical. For the Russian Federation, a boycott of energy purchases means minus 60% of budget revenues, a consequence of the death of the economy.
    1. Sten_2 Offline Sten_2
      Sten_2 (Alexander Zabolotsky) 9 March 2022 00: 58
      If everything was as simple as you describe, then the Germans would not have fought so hysterically for Nord Stream 2 at the time, entering into a strong confrontation with the United States
    2. Expert_Analyst_Forecaster 9 March 2022 03: 40
      It is bad when people are not friends with arithmetic and believe that gas simply originates in the ocean and floats into pipes or underground storages.

      Energy resources are a double-edged sword.
      Europe does not have the ability to quickly replace Russian gas and oil.
      Russia does not have the ability to quickly replace the revenues from oil and gas supplied to Europe. At the same time, there are cheap energy resources for their economy. Therefore, I believe that our economic prospects are better than those of Europe.
      Although in fairness it must be said that the United States has the best prospects.
      They will supply Europe with their gas at high prices, gradually ousting Russia.

      So Europe will become a victim, Russia will lose part of its income, the US will receive additional income, being a raw material appendage of China and Europe.

      Before losing part of its income, Russia will receive windfall profits.
  9. zloybond Offline zloybond
    zloybond (steppenwolf) 10 March 2022 12: 48
    Russia clearly needs the nationalization of outgoing businesses. And not a cry about intentions, but a real urgent implementation of demonstrative actions. Some will come back out of fear of losing everything. And Russia definitely needs to raise the status of the ruble. It is necessary to start selling goods, raw materials for the national currency. Let them buy rubles if they want gas... Having set the USS condition - uranium for rubles, the rate will definitely at least stop. And if the world finds out that the USA is buying rubles to buy uranium, the rate will begin to strengthen.